BP eyes refinery sale; energy stocks off

Sector loses ground after weekly U.S. petroleum supply data

By

SteveGelsi

NEW YORK (MarketWatch) — Sliding crude-oil prices and bearish crude supply data weighed on energy stocks Wednesday, as reports of a deal in which BP PLC would sell a Gulf Coast refinery to Marathon Petroleum Corp. provided little lift to the sector.

Setting a negative tone for energy stocks, crude futures
CLV2, +0.18%
lost 2.7% to trade at $92.52 a barrel. The Energy Information Administration said U.S. oil supplies rose by 8.5 million barrels in the past week, greater than the forecast of 2.5 million barrels in a survey of analysts by Platts. See Futures Movers for more on crude prices

BP (BP.)
BP, -1.65%
is in talks to sell its Texas City refinery to Marathon Petroleum
MPC, -0.55%
the Financial Times reported in its online edition, citing persons familiar with the matter.

Talks reportedly had been ongoing for months, though it was unclear if a deal could be reached. Marathon is exploring a $2.5 billion deal for the refinery, the report said.

BP spokesman Scott Dean declined to comment on the specifics of the deal, but said the oil company remains on track to announce a sale by the end of the year.

“We are in advanced discussions regarding [a] potential sale and have had discussions with a number of interested, qualified industry participants,” Dean said.

The selloff would be the latest in BP’s aims to help pay for costs related to the Deepwater Horizon disaster in 2010, bringing the company closer to its aim of $38 billion in disposals by the end of 2013. Neither BP nor Marathon could immediately be reached for comment.

Prior to the Deepwater Horizon accident, the Texas City refinery was the site of an earlier tragedy for BP and its workers in a March, 2005, explosion that killed 15 and injured 170.

BP shut down the refinery for about two years and paid $1 billion to refurbish the 475,000 barrel-a-day facility. In 2007, BP announced it had spent $1.6 billion to compensate victims of the explosion. The company resolved more than 1,650 personal injury claims arising from the incident.

Also in Wednesday’s spotlight, Chevron Corp.
CVX, -1.01%
said an exploration well near its Gorgon development in Western Australia confirmed about 128 feet of net gas pay.

“This new discovery in the Greater Gorgon Area further highlights the quality of Chevron’s exploration capability in the region and the significance of Australia to Chevron’s energy portfolio,” said George Kirkland, vice chairman of Chevron.

The well was drilled in the WA-374-P permit area about 75 miles northwest of Barrow Island off the Western Australian coast.

Chevron Australia is the operator of WA-374-P with a 50% interest. Royal Dutch Shell
RDS.A, -1.05%
and Exxon Mobil Corp.
XOM, -0.80%
each hold 25%.

Chevron’s blue-chip shares fell 0.3%.

FirstEnergy cutting 200 staff

FirstEnergy Corp.
FE, -0.09%
said it expects to reduce staff by about 200 as part of an internal review that could result in additional job reductions. The Akron, Ohio-based power company said it’s reacting to “meet the challenges of a continued weak economy.”

The results of an organizational study will be announced in early November. FirstEnergy said it’s facing “continued slow customer load growth and an abundance of electric generation supply resulting in low power prices.”

First Energy shares rose 0.6% on Wednesday.

PDC Energy developing Utica acreage on its own

PDC Energy Inc.
PDCE, -3.43%
a small-cap, independent energy company, said its acreage in the Utica region of Ohio is exceeding expectations in initial production rates, liquids mix and other measures.

PDC is no longer actively seeking a joint-venture partner to develop the play because the offers it received didn’t meet its value expectations, saying management believes “developing its approximate 45,000 net acre Utica position on a stand-alone basis will produce greater long-term value.”

The company plans to invest about $50 million in the Utica next year. PDC Energy’s shares fell 5.9%.

Intraday Data provided by SIX Financial Information and subject to terms of use. Historical and current end-of-day data provided by SIX Financial Information. All quotes are in local exchange time. Real-time last sale data for U.S. stock quotes reflect trades reported through Nasdaq only. Intraday data delayed at least 15 minutes or per exchange requirements.